ICU

ICU Says no to PURC (Open letter to Energy Minister, Trade and Employment Minister)

THE Industrial and commercial Workers’ Union (ICU) Ghana has noted with great surprise the recent astronomical increases in utility tariffs announced by the Public Utility Regulatory Commission (PURC), effective June 1, 2010 without exhaustive discussion with the stakeholders in this crucial matter.

ICU POSITION ON THE RECENT INCREASES IN TARIFFS BY PUBLIC UTILITIES REGULATORY COMMISSION (PURC)

THE Industrial and commercial Workers’ Union (ICU) Ghana has noted with great surprise the recent astronomical increases in utility tariffs announced by the Public Utility Regulatory Commission (PURC), effective June 1, 2010 without exhaustive discussion with the stakeholders in this crucial matter.

The ICU- Ghana is the single union that organizes over 95% of all industries in the manufacturing sector in Ghana.  This recent increases have resulted in most employers signaling a total shut-down if nothing is done about the tariffs immediately.

The situation on the ground is different from the average increases of 89% and 36% for electricity and water respectively announced by the PURC.  The real increase ranges from 198% - 235% in the manufacturing sector.  For example, the existing rates are 9.05 GHP/KWH and with the new tariffs the manufacturing sector, will now pay 27.00 GHP/KWH which translates to an increase of 198% while 8.05 GHP/KWH also goes for 27GHP/KWH attracting an increase of 235%.

The cumulative effect of these increases are that, the manufacturing sector of the economy, i.e. Textiles and Garments, Steel and Metal and Food and Beverages, just to mention a few, would undoubtedly encounter operational difficulties, and when that happens the poor Ghanaian worker would suffer most.  Some workers would most likely lose their jobs as against the quest for creation of more jobs promised by the current Government.  Can this therefore be the Better Ghana Agenda promised by the Government?  Already, managements of may manufacturing industries are considering how to handle the situation.  Some are contemplating passing on the increases in the tariffs to the consumer and this will definitely lead to increase inflation and thereby make live unbearable to Ghanaians.

Others too have realized that passing on the effects of tariffs increased on their products to the consumer will be so high that the consumer will not be able to afford.  This will further worsen the competitive disadvantage of local manufacturing industries grappling with very cheap products from China.  As a result, some employers may opt for a complete shut-down of their companies resulting in total lay-offs while others may be considering cutting down the number of workers.  It has also come to our notice that, in steel industries alone about 2,500 workers who are directly employed would be affected negatively.  Additionally, about 3,000 workers are also going to be indirectly affected because they will be out of employment.  The 3,000 are mainly suppliers of steel scrap, sea shell, coke etc.  to the steel industry, notably Ferro Fabric Limited, Tema Steel Works, Sethi Brothers/Steelco among others.  This means in the steel and metal industries alone over 5,500 workers are going to lose their jobs, not to mention their dependents.

Reliable information has it that the recently revived Volta Star Textiles Limited had shut down three weeks ago because the company could not settle its outstanding electricity bills amounting to GH¢490,000.00.  What will be the plight of Volta Star Textiles Limited if the increase in tariffs remains unchanged?  Tex Styles Ghana Limited and other Textile Companies which have been struggling to survive may give up the fight since imported inferior and cheap products are flooding the markets.  Additionally, the once giant aluminum companies in the Metal Sector (Aluworks and Valco) have for a long period of time been faced with hydra-headed challenges in the scheme of operations and therefore the new tariffs would further compound their precarious situation.

Similar challenges led to the closure of Valco and from all indications the second largest aluminum company thus Aluworks is also on the verge of total collapse.  The high increases in tariffs will also have serious impact on domestic consumers.  Already, those using the prepaid meters are feeling the harsh effects from the increase.

The reasons Electricity Company of Ghana and Ghana Water Company has most of the time given to justify increases in tariffs is that the increment is necessary for improvement in service.  Meanwhile the opposite is what is on the ground.  We wish to state that there is the need for the two service providers to urgently address the inefficiencies in their operations – i.e waste, illegal connections and huge outstanding bills including government portion.

We have followed the PURC’s arguments on the basis for the recent increases with keen interest.  The ICU is not against increases in tariffs per se but rather we are much concerned about the level of the increases which are not commensurate with salary levels in the country.  For the “Better Ghana Agenda’ to be a reality and for Ghanaians to feel it in their lives, we are calling on the PURC and Government to engage all shareholders in fruitful discussions to bring down the increases to levels that will be affordable to industries and ordinary Ghanaians.

We expect a positive response from PURC and Government to our demand or we shall advise ourselves on the next line of action to be taken.